A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate

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A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 8.9%, and sells for $1,110. Interest is paid annually. (Assume a face value of $1,000 and annual coupon payments.)

a. If the bond has a yield to maturity of 9.1% 1 year from now, what will its price be at that time?

b. What will be the rate of return on the bond?

c. If the inflation rate during the year is 3%, what is the real rate of return on the bond?

Related Book For answer-question

Investment Science

ISBN: 9780199740086

2nd Edition

Authors: David G. Luenberger

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Posted Date: Apr 24, 2024 09:21 AM

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A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate

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To calculate the price of the bond and the rate of return well use the given information and formula... View the full answer

Investment Science

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